Green Circle Bio Energy took its first steps towards a second wood pellet plant this week. In a letter of intent, Green Circle communicated its interest in both leasing a site for a new pellet plant and entering into a wood fiber supply agreement with The St. Joe Company. All plans are contingent upon the ability of the Port Authority to secure funds necessary to dredge the natural deep water port at Port St. Joe and return it to operation.

A commitment from Green Circle provides the Port Authority the green light to move forward with grant proposals for funding the ship channel dredging. “We are excited about the possibility of leveraging our strong presence in Northwest Florida, further job and economic development in the region, and look forward to the successful dredging improvements of the shipping channel," said Green Circle CEO Morten Neraas.

Green Circle currently operates the world's second-largest wood pellet plant in Cottondale, Florida. Opened for production in April 2008, the plant produces 560,000 tons of wood pellets per year and adds more than $70 million to the local economy. Green Circle ships pellets manufactured at its Cottondale site from the port at Panama City.

Pellets produced at the new facility would be routed to the Port of Port St. Joe via truck or the Genesee & Wyoming railway and then shipped to European markets. In addition to dredging, the development of bulk cargo port facilities to accommodate Green Circle’s shipping needs is under consideration. 

However, the project and the economic benefits it would bring to the area are far from certain. The port has struggled to overcome the economic downturn that resulted in the loss of its remaining industrial base and was last dredged in 1986. The St. Joe Company, which owns a port site that once belonged to the now bankrupt Florida Coast Paper Company mill (formerly the St. Joe Paper Company), has been instrumental in redevelopment efforts at the Port.  The company and Genesse & Wyoming contributed $1.25 million as part of a $5 million project to restore rail service at the port. Apalachicola Northern railway discontinued service after its remaining rail traffic generator - Premier Chemicals - closed in 2010. 

Just days after the Green Circle and Port St. Joe announcement, Florida Governor Rick Scott vetoed a $2 million appropriation that would have allowed the Port Authority to bring its $4 million mortgage current. The governor explained his rationale for the decision as, “…projects funded with state dollars should be able to demonstrate a benefit to Florida’s taxpayers. In addition, this issue is a matter of pending litigation.”

Capital City Bank holds the mortgage in question on a barge terminal parcel at the port. Earlier this month, Capital City funded a Protect Our Port campaign to encourage citizens to contact Governor Scott to express their support of keeping the Port under public ownership. The effort to buy the Port Authority time to find secure business revenues did not have the intended effect on the governor, and a message on the website now reads:

“Over the last two weeks, concerned citizens like you have responded overwhelmingly to our efforts to save public ownership of the Port of Port St. Joe. Several hundred of you went to our website and submitted email letters to the Governor urging him to approve the funding provided by the Legislature. Unfortunately, the funding did not survive veto review and will not be available to help return our port to solid financial footing. Nonetheless, we want to thank you for your dedicated support for this effort and your continuing commitment to the future of Port St. Joe and the surrounding community.”

Without the funds available to pay the mortgage, the case heads to Circuit Court. Both Capital City and the Port Authority seek summary judgments in their favor. A court date is not yet known.

In an attempt to help with mortgage payments and dredging costs, the Port Authority previously submitted two, $5 million pre-proposals to receive funds under the RESTORE Act. Those funds are yet to be distributed. In the meantime, a $750,000 grant from the Florida Depart of Transportation is available for the initial engineering work and permitting that dredging requires. The grant requires a $250,000 match which is likely to come from St. Joe.

"The relationship between Green Circle and St. Joe is a step toward creating jobs and revitalizing the Port of Port St. Joe. A viable business is ready to use the port, and rail access to the port site is being improved. The missing link to an operational port is the necessary dredging improvements to the shipping channel,” said St. Joe CEO Park Brady. Let’s hope it comes to fruition.

• Rollcast Energy’s 53.5-MW Piedmont Green Power biomass power plant began operating in April. The Barnesville, Georgia facility will consume 500,000 tons of woody biomass annually. Rollcast has sold the plant’s output to Georgia Power under a 20-year power purchase agreement.

Several biomass electricity project announcements have been made recently. Here are the details:

• Rollcast Energy’s 53.5-MW Piedmont Green Power biomass power plant began operating in April. The Barnesville, Georgia facility will consume 500,000 tons of woody biomass annually. Rollcast has sold the plant’s output to Georgia Power under a 20-year power purchase agreement.
• Wisconsin Energy subsidiary We Energies announced it will begin operating its 50-MW biomass power plant in late 2013. The plant is on the site of Domtar’s pulp and paper mill in Rothschild, Wisconsin. It will consume 300,000-500,000 tons of logging slash and mill residues annually.
• The on-again, off-again conversion of Georgia Power’s Plant Mitchell in Dougherty County, Georgia into a biomass power plant appears to be on again. Craig Barrs, Georgia Power’s executive vice president for external affairs, has said that the company would like to retrofit the plant to burn wood, but that it is waiting on new rules from the EPA before making a final decision. If given the go-ahead, the plant will be the largest of its kind in the U.S. The conversion, which was originally scheduled to be completed this July, is now expected to be completed in 2017.
• Greenleaf Power restarted its 28-MW biomass power plant in Scotia, California. The plant has been offline since November.
• Kentucky Power Company has asked the Kentucky Public Service Commission for approval to enter into a renewable energy purchase agreement (REPA) with ecoPower Generation-Hazard LLC. The REPA would be for a 20-year period to purchase up to approximately 58 MW of electricity from a biomass power generating facility ecoPower plans to construct in Perry County. If approval is granted, the plant could be operational in 2017. The facility will consume biomass materials including sawdust, bark, wood chips, tip wood and low-quality logs.

At the start of April, Forest2Market’s composite lumber prices reached the highest point of the year thus far at $434/MBF (Week 14). Prices steadily decreased in subsequent weeks, ending the month six percent lower at $407/MBF. Still, prices remain well above their levels of just one year ago.

Is 2013 shaping up as predicted? When we last wrote about southern pine lumber prices in A Perfect Storm?, we predicted the seasonal price drop seen in recent weeks. Increased mill capacity has met demand - allowing shipments to catch up with orders - and lumber buyers have reached satisfactory inventory levels for the first time since the sharp upturn in housing construction surprised the market during 4Q2012. As a result, lumber prices have fallen over recent weeks.

The cold, wet spring experienced throughout much of the Northeast and Upper Midwest exacerbated the current weakness seen in the market. As the days become warmer and drier in late spring and summer and construction activity picks back up, lumber prices are expected to level off.

Over the past several weeks, a 38 percent decline in multifamily starts has alleviated price pressure on 2x4s and 2x6s. Though single-family home starts also fell (by 2 percent) last month, building permit activity for these homes remains strong. Upward price pressure on the wides could follow if single family starts gain momentum. The long-term picture is still developing; it looks like prices are on a path to return to the historic trend line, though they will still remain above seasonal historical values.

The above figure summarizes pricing data gathered for Forest2Market’s weekly lumber market report, Mill2Market. For this report, Forest2Market aggregates sales order data submitted directly by report subscribers. This figure charts weekly sales order prices from January 2011 through year to date 2013 and compares sales order data, FOB Mill on a volume weighted $/MBF basis. The prices in the figure are composite prices; they include dimension lumber, timbers and boards.
For more information, visit the Mill2Market page of our website, or call Bob Bratton at 980-233-4034.

In an effort to once-and-for-all define forest roads as non-point sources of pollution, Senator Ron Wyden (D-OR) and Representative Jaime Herrera Beutler (R-WA) introduced the Silviculture Regulatory Consistency Act in their respective Houses late last week. The Act would add legal precedence to a recent Supreme Court decision and long-standing EPA policy that stormwater discharge permits are not required for forest roads.

Last March, the Supreme Court ruled forest roads used during timber harvests do not require stormwater discharge permits. The decision overturned a 2011 U.S. Court of Appeals Ninth Circuit Court ruling (NEDC v. Brown) that defined the use of commercial logging roads as an industrial activity, similar to factories and other facilities, and thereby subject to permitting requirements set forth by the Clean Water Act. If passed, the new legislation would circumvent litigation opponents to the Supreme Court’s rule intend to bring forth.

Bill co-sponsor Senator Mike Crapo (R-ID) and Representative Herrera Beutler sponsored previous versions of the Silviculture Regulatory Consistency Act shortly after the Court of Appeals ruled that forest roads used for timber harvests require mandatory industrial stormwater discharge permits. Neither of those versions made it to the floor for a vote.

The current bills have been referred to the Senate Committee on Environment and Public Works and the House Committee on Transportation and Infrastructure. Should you wish to express your support for the Act, contact information for Senators and Representative in each state is available through Contacting the Congress.